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California’s Ambitious Health Plan Stalls :By KEVIN SACK, NY Times, September 9, 2007 http://www.nytimes.com/2007/09/09/us/09health.html?_r=1&oref=slogin SACRAMENTO, Sept. 7, 2007 — After losing much of August to a budget impasse, state lawmakers and Gov. Arnold Schwarzenegger have been unable to reach agreement on a proposal to extend health coverage to all uninsured Californians, raising the possibility of a special session of the Legislature and a statewide ballot measure. Last January, in the afterglow of a triumphant legislative session and an easy election to a second term, Mr. Schwarzenegger proposed coverage for all 6.7 million uninsured Californians. Vowing that his state would lead the nation, the moderate Republican made his plan the centerpiece of a new “postpartisan” politics. But with the Legislature speeding toward adjournment next week, enactment of Mr. Schwarzenegger’s proposal is far from certain. Though there is consensus on the issue’s urgency, there is no agreement on either the breadth or the financing of a health plan. Given the national fanfare that accompanied Mr. Schwarzenegger’s announcement, and the sense that this nonelection year may afford a narrow window of opportunity, some experts say failure in California may arrest the national momentum behind health care reform. “Failure to get something done here will have the effect of throwing a wet blanket on the national debate,” said Dr. Robert K. Ross, president of the California Endowment, a nonprofit health policy group. Mr. Schwarzenegger, who vowed in last year’s campaign to resist tax increases, has added a late wrinkle by suggesting that he and the lawmakers should enact the outlines of a plan but leave the financing — i.e. the tax increases — to a ballot initiative. A primary reason for doing so would be to circumvent lawmakers from the governor’s own party, whose votes would be needed to build the two-thirds majority required to raise taxes in California. It also would give Mr. Schwarzenegger a measure of political cover. Asked in an interview whether he was prepared to renege on his tax pledge, Mr. Schwarzenegger said it would not be his doing if voters agreed to expand health coverage by raising a broad-based tax, like the sales tax. “Not me, not me,” he said. “This is going to be one where we’ll let the people make the decision to fund this.” Though polls indicate that Californians are fed up with the health care system, they may not be eager to vote for the substantial tax increases needed to pay for universal coverage. But the governor, who was rebuffed by voters in a series of 2005 ballot measures, sounded confident he could sell this one. “I think the timing is right,” he said, seated in his cigar-smoking tent in the courtyard of the smoke-free Capitol. “And if you go out and explain it to the people, market it the right way, I think we have a shot at doing it.” Would that not require campaigning for a tax increase? “I would encourage the people to vote for our health care reform because it is the best investment they can make,” he said. “When you talk about spending a dollar to make two, this is the perfect example.” Mr. Schwarzenegger’s proposal has always relied on contributions from employers, hospitals and doctors, though he has chosen to call them fees. Fee increases, unlike tax increases, do not require two-thirds approval. His original plan would have raised $12.1 billion to provide free or subsidized insurance to those without it and to increase the state’s lowest-in-the-nation Medicaid reimbursement rates. The plan also includes financial incentives to encourage preventive care in an effort to contain rising health costs. Mr. Schwarzenegger has emphasized the need for “shared responsibility” for universal coverage. He proposed to assess doctors 2 percent of their gross receipts and hospitals 4 percent of net patient revenue. Employers with more than 10 workers who did not offer health benefits would pay 4 percent of their payroll. By spreading the pain, the plan has made plenty of enemies. This week, however, the California Hospital Association announced its support after calculating that most hospitals would gain more from increased reimbursement than they would lose from the 4 percent payments. The state medical association, which figures that almost all doctors would be net losers, has fought the plan. Mr. Schwarzenegger, who never converted his proposal into a detailed bill, said he would insist that individuals be required to have insurance, thus expanding the risk pool, and that insurers be required to cover everyone regardless of health status. Of the four states that have passed plans with the goal of full coverage, only Massachusetts has mandated individual coverage. Legislative lawyers shifted the political calculus in June when they concluded that Mr. Schwarzenegger’s proposed assessments on medical providers would qualify as tax increases. The Assembly speaker, Fabian Núñez, and the Senate president pro tem, Don Perata, both Democrats, then fashioned a bill that would require employers to spend at least 7.5 percent of their payrolls on health care. Due to labor concerns about the cost of premiums for workers, the Democratic plan would not make insurance mandatory, and it would cover only 69 percent of the uninsured. With negotiations stalled, both chambers plan to pass the bill early next week, fully expecting Mr. Schwarzenegger to veto it before calling a special session, said Steven R. Maviglio, a spokesman for Mr. Núñez. Mr. Núñez said he would prefer a legislative solution to a ballot initiative. “There’s no reason for a Democratic-controlled Legislature to pass a shell bill on the possibility that six months from now the voters would approve it,” he said, adding that a sales tax increase would be regressive and unpopular. Mr. Perata described the discussions about broad-based taxes as “a fundamental shift in the governor’s position” and said pragmatism dictated incremental progress. “But this governor likes to play on a big stage,” he said, “and this is a big play.” Mr. Schwarzenegger said he did not enter politics to think small. “Why limit ourselves?” he asked. “Why should we say we are just like the rest of America, that we are not capable? California has always had the attitude that anything is possible, and let us lead and inspire the rest of the nation to follow us.” Links * Health Care * Arnold Schwarzenegger category:News coverage